To Improve Contracts, Act Individually and Collectively
(This piece was first published on the website of LegalSifter partner American Inns of Court.)
Allow me to suggest how to approach contracts in a way that makes your work with contracts more efficient and more gratifying.
A recurring theme in the posts I’ve written for publication here is that generally, contracts are a mess in terms of what they say and how they say it. That’s a function of how they’re created: by copy-and-pasting from precedent contracts of questionable quality and relevance, bolstered only by conventional wisdom that’s generally so flimsy you can poke holes in it with your finger.
That comes at a cost. Companies waste vast amounts of time and money as negotiations drag on unnecessarily. Deals happen and deals crater because of poor choices. Because of poor drafting, companies might well find that a contract doesn’t give them what they expected, and that can lead to disputes. And those who work with contracts are at risk of finding themselves overworked and floundering in the dysfunction.
Being an Informed Consumer
The foundation of working effectively with contracts is being an informed consumer of contract language—knowing how to say clearly, concisely, and consistently whatever you want to say. Without that, you’re doomed to floundering.
The path to being an informed consumer of contract language runs through my book A Manual of Style for Contract Drafting. It’s the only source of a comprehensive set of guidelines for clear contract language. It gives the conventional wisdom a sound thrashing, but no one has attempted to debunk it. One reason is that anyone looking to take me on would have to do some serious work. Another reason is that I’m right—the choices I present aren’t complicated. (See this 2020 blog post for more about that.)
Handling the What-to-Say Part
Beyond knowing how to say in a contract whatever you want to say looms the challenge of what to say. You have to understand deal points and the various ways to address them and how they relate to your company’s (or your client’s) needs. Currently there’s no easy way to achieve that, other than seeking advice from those more experienced than you and rooting through commentary, doing your best to distinguish between what makes sense and flawed conventional wisdom.
You also have to understand the administration and dispute-resolution aspects of contracts. They’re addressed in what’s commonly called “boilerplate”—the miscellaneous provisions you find at the back of most contracts. Few have the time or inclination to give boilerplate much thought. And the commentary is a mish-mash. (Go here for links to my materials on boilerplate.)
Building an Effective Process
For an organization’s contracting to make sense, you can’t just rely on having individuals who understand what to say in contracts and how to say it. That’s because contracting requires a centralized process.
The process could be a bad one, such that it’s in the grip of inertia and relies on improvised assessments by individuals. Or it could rely on objective standards, instead of conventional wisdom. It could purge perverse incentives, such as the urge to make things seem more complicated than they are. It could adopt reasonable positions, to get deals done faster. It could use automation thoughtfully. And it could use data to inform its decisions.
If you want to achieve the latter kind of process, I recommend you follow the recommendations Alex Hamilton makes in Sign Here: The Enterprise Guide to Closing Contracts Quickly. (I blurbed it.) This sort of change isn’t easy—you won’t achieve it unless you’re willing to make a concerted break with whatever your process has been.
When you’re in control of what a contract says and how it says it, and when you work on contracts as part of a thought-out and standardized process, you’re spared the randomness, confusion, stress, and wheel-spinning that’s a feature of the traditional contracts process. So your work with contracts is easier.
It should also be more gratifying. An orderly process is a civic virtue—it allows us to work together for our collective benefit. We get a modest sense of lives shared. At a time when civic virtue is under attack, that’s not nothing. Yes, contracts are a tiny part of society, but you do your part and hope others do theirs.
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